The classification of socialism and capitalism as economic systems based on their competing or contrast characteristics (Sternberg, 1958). The competing characteristics of the two systems include; general efficiency of the system, stability of the economy and liberty. Socialism is based on public ownership, central planning and production for use. Such systems included Soviet Union model that existed from 1917 as a result of Russian Revolution. There was a high level of job security and apparently no unemployment. In this system, there was no income from private property and security of materials since they were readily available at a low cost. Therefore, socialism is about the state taking up the responsibility of planning, production and distribution of goods and services to its citizens. Production in this system is not driven by an objective of earning profits but the need of the socialists. Planning is done by central government with coordination of cooperation this ensures that there is no duplication of efforts and minimizes waste. Since production is based on a need, it is a challenge to determine which need is more valuable hence is government fail to deliver services.
Capitalism is where the mean of production and distribution of goods is privately owned by individuals or corporate. There is minimal control and interference from the government. Their key role is to regulate the activities of the economy. Natural resources in capitalism can be owned by individuals unlike in socialism. Allocation and distribution of national resources are determined by demand and supply. A drive to get profits in production leads to waste of resources.
Capitalism is the best system that will dominate to the end of the century, since it is a modern monetary-wage labour system that has in the long run proved to be viable while socialism has proved to be viable only for decades(Kornai, 1992). The failure of socialism system can be assessed based on its initial objectives which was to outdo capitalism in the perspectives of rationality, efficiency and welfare (Robinson, 1960). According to Asselain(1999), capitalist and socialist countries have a significant gap in terms of development now compared to two decades ago. Labour systems are faced with challenges during evolution which should be solved. The capability of the labour monetary system to adapt in such situations is what will make it dominate to the end of the century. In the last two centuries, capitalist systems were able to overcome about four structural crises unlike socialist systems where majority did not manage to navigate away from structural crises in 1980s.
References
Asselain JC (1999). Comment le capitalisme a remporté le conflit du siècle: le basculement des années 1956–1968. In: Chavance B, Magnin E, Motamed-Nejad R, Sapir J, eds. Capitalisme et socialisme en perspective. Évolution et transformation des systèmes économiques. Paris, La Découverte: 93–121.
Kornai J (1992). The Socialist System. The Political Economy of Communism. Oxford, Clarendon Press.
Sternberg F (1958). Le conflit du siècle. Capitalisme et socialisme à l’épreuve de l’histoire. Paris, Seuil
